Is the Surface RT cheap, or is the iPad mini expensive?

Is the Surface RT cheap, or is the iPad mini expensive?

Summary: Microsoft has changed the landscape of consumer tablets by adjusting the price of Surface RT. But they may also have made a rod for their own back...

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TOPICS: Windows 8
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For a few weeks now I've been meaning to write a piece around whether the iPad mini is too expensive compared to what are now acceptably good Android tablets.

Spoiler: the iPad mini is about twice the price of the Nexus 7, Samsung Galaxy Tab 3 7", and the Kindle Fire HD.

But Microsoft has rather spoilt that piece by reducing the price of Surface RT. Whereas this device was retailing in the US for $499, it's now going for the iPad-esque price of $349.

That might change things...

Tablets

For this piece, I've taken a selection of tablets and looked at US retail prices. I've included the HP Slate 7, Nexus 7, Nexus 10, Samsung Galaxy Tab 3 7" and 10.1", Kindle Fire HD, iPad mini, iPad 2, iPad with Retina display, Surface RT and Surface Pro.

I've only included WiFi models. For Surface Pro, I've used the smallest 64GB option. For everything other than Surface RT, I've used a 16GB option. Surface RT's smallest size is 32GB -- however, because Windows takes up so much space on this device, a 32GB Surface RT is approximately equal storage-wise to an 16GB iPad or Android tablet.

I've ignored the wrinkle about the price of the Touch Cover keyboard/cover for Surface RT. You don't need a keyboard when using Surface RT properly. Plus, when you buy an iPad you need a good case for it, which will cost you around $50 whatever you do. Thus, I've ignored both the keyboard from Surface RT and a third-party case for the iPad.

This chart shows where Surface RT used to be positioned. Specifically, bang against the iPad with Retina display:

Old Surface RT pricing
The old/original Surface RT pricing.

This chart shows where Surface RT is now positioned. Specifically, right in the middle of the iPad mini and iPad pricing:

New Surface RT pricing
Microsoft's revised Surface RT pricing.

Both of those charts clearly show how the players we're looking at are working with price in the market. For $200 you can get a very decent Android tablet. HP seems to be massively low-balling the market, although the Slate 7 is a pretty good tablet other than the murky and disappointing screen.

Of course, if you look at Apple's pricing the full-sized iPad is clustered with the full-sized Android tablets. It's really only the iPad mini that looks comparatively expensive. Logically if you look at the pricing chart, the iPad mini is in the wrong place. It should have a small premium (20 percent, maybe?) over its 7" brethren, not the twice-the-price position it currently has.

Do more

At the price it is, Surface RT looks like a good deal. It's a little cheaper than the iPad 2 and its Android competition.

But what are you actually getting for your purchase of a Surface RT?

We know that the richest selection of apps on the iPad can be had on the iPad. Android tablet apps are improving, but remains in a second place position. The Windows Store app story is improving, but compared to both remains pretty poor.

But, I've spoken to a good number people who can make Surface RT work for them in terms of apps capability (often by using websites to get around problems with the apps).

Microsoft is currently trying to position Surface RT as "the tablet that runs Office". This is perfectly logical and sensible move, but to an extent it implies that you can balance out the entire Apple App Store with Office. Imagine a set of scales with every app for iOS on one side and Office on the other -- that's the picture that occurs to me.

You'd have to ask yourself if that works for you, because that's what you get at this point. Surface RT is a good price where it now is, and many people would regard being able to run Office on it as an advantage. Windows 8.1 promises to deliver improvements to Windows RT that makes it a more refined product. (One of the things that disappointed me about Surface RT was the general "v1.0" feeling of the thing.)

But, opportunity cost-wise, you'd be giving up the ability to run essentially every mobile app or mobile game there is.

And then?

Perhaps the more interesting question about the Surface RT pricing is this: "what next?"

iPads have tended to get a little bit cheaper as new products in the range are released. The assumption around the price reduction is that Microsoft is looking to clear inventory before a new set of Surface tablets are announced.

That might be logical, but consumers are never going to accept a price hike in the Surface RT range at this point. Microsoft has now very clearly said "the value provided by Surface RT is worth $349". They now cannot go back and say that a v2.0 product is $499.

I'd like to see Microsoft announce 8" Surface devices when they do refresh the range, and I'd be very surprised if they don't. 10" is too large for a tablet -- the smaller tablets are much, much more appropriate for domestic use.

That creates another problem, because where should an 8" Surface RT tablet be positioned in the market. Given that the iPad mini feels a little too expensive, the right price for that would seem to be around $250.

What do you think? Post a comment, or talk to me on Twitter: @mbrit.

Topic: Windows 8

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199 comments
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  • There is an Apple pricing precedent that counters one of your assertions

    Specifically, you state that, "They (Microsoft) now cannot go back and say that a v2.0 product is $499."

    Apple has always discounted a prior iPad vs the latest generation if the two were being sold at the same time. Just one example will suffice. The iPad 2 was discounted by about 100 dollars when the iPad 3 was released.
    kenosha77a
    • Agreed

      Consumers are not going to be taken back when a model is clearence priced to make way for the next model being sold at the old price.

      However I don't think that can happen as a $500 WindowsRT tablet just doesn't have any competitive advantage over a full Windows8 tablet which are already selling at a lower price.

      If Microsoft can make a smaller WindowsRT tablet to compete at prices with 7 inch android tablets the maybe WindowsRT has some reason for existing. Yet at the same time it is just as likely that a 7 inch Windows8 tablet could be made and sold at the same price.
      Emacho
      • RT is a dead end

        That's how I see it. The new Atoms make ARM obsolete, and the value proposition for MS is now that you can get full Windows with iPad-beating battery life.
        x I'm tc
        • You might be right with that Atom vs ARM opinion.

          However, the only reason that I can fathom why Microsoft developed it's Window's OS for the ARM platform was to sell it's Office Suite apps to multiple third party sources.

          Office is and will remain a "cash cow" for Microsoft for quite sometime. (And yes, I know all about the alternatives to those MS apps on other platforms)

          As such, this "Great Swami" still foresees an ARM based RT ecosystem for the near future.
          kenosha77a
          • Another argument for ARM vs Atom

            Don't forget that there is at least one other potential reason for the ARM based RT ecosystem. Assuming that MSFT continues to move forward in the direction they're leading, we could see more of the ARM based Windows Store Apps appear on their mobile platform. This will potentially offer at some point in the future the ability to write the app once and run on all three screens (phone, tablet, PC). We're not there yet, but the proverbial writing is on the wall.
            jimwooley@...
          • Re: We're not there yet, but the proverbial writing is on the wall.

            Perhaps, there is a reason why Microsoft didn't do this during the decades they had virtual monopoly. Whatever that reason is, it is apparently still valid.
            danbi
          • ARM vs ATOM in 2015

            The RT to mobile argument only holds water as long as Windows phones don't move to x86 - which could very well be the case by 2015 when Intel has rolled out its next generation chips.

            Intel is still the 800-pound gorilla of CPUs, and speculation is that the 2014 launch of their 14nm Atom chips will surpass ARM chips in both power savings and processing power by a large margin. If that is the case, it will only make sense for MS to make the move to a single platform - and the winner won't be ARM.
            jturnley
          • Are you sure?

            I am not that sure. ARM still beats new Intel chips. Previous benchmarks were faulty. Intel and MS have to work harder, however their competitors will not stay inactive.

            http://www.eetimes.com/author.asp?section_id=36&doc_id=1318894
            oldman60
          • The problem is will it be cost effective?

            Even if the power and processing beats ARM, none of the other platforms will be using ATOM. So Intel has the uphill battle of convincing Apple, Samsung (who also makes their own processors) and others to buy in. Microsoft is simply not a big enough player in the mobile space to hang one's hat on.

            It's not 1993 anymore.
            tallbruva
          • ARM gives Microsoft some clout with Intel

            If Microsoft has ARM experience, they can play Intel off of ARM, for better prices - just as Windows OEMs paly Intel off of AMD for better pricing. Frankly, I am surprised that AMD does not have wider acceptance from the big players.

            Disclaimer: My only experience with AMD was with a Compaq laptop whose on-board graphics died after two years!

            Further, if Microsoft can build a viable Windows store ecosystem (with business-grade productivity apps) they could offer an entire line up of tablets built on ARM. MS Office could be just the beginning of Windows on ARM. Windows on ARM could be a very tough competitor for both Apple and the various ARM tablet makers.
            M Wagner
          • ARM is for phone, primarily

            Microsoft needed a NT kernel port for Windows Phone. The task ahead for the next few years is to unify the developer experience for phone, tablets and desktops.
            JonSawyer
          • ARM is for processing.

            Just as a 386 was. Then 486. 586. 686...

            ARM can handle anything Intel throws at it - even 64 bit.

            Are they a bit behind in the speed department? yes.

            Are they catching up? you bet.

            Because the ARM architecture is much simpler to implement than any x86 variant, it will always have a bonus on the power consumption.
            jessepollard
          • Well no, not really ...

            Intel (x86/x64) processors out-perform ARM processors. ARM are design with low-power in mind in order to preserve battery life. A MUST for smartphones and tablets. Windows and Mac OS X (and Linux for that matter) are full-featured operating systems featuring preemptive multitasking.

            Neither iOS nor Android (nor even Windows RT) are fully preemptive multitasking operating systems. That is why battery life on these devices is so good.

            Intel is making great strides on lowering power consumption on their latest processors but the bottom line is that, if Microsoft ported Windows 8 (legacy apps and all) to ARM processors, battery-life on those devices would be no batter (and perhaps worse) than on Intel.
            M Wagner
          • Ре: if Microsoft ported Windows ... code

            This is not because one CPU architecture is better than another, but because Windows code is and always has been bloated.
            danbi
          • But that is connected to the CPU architecture.

            Again, it's the chicken and egg issue. Many people say software drives hardware. But maybe the new dynamics of mobile computing are reversing that.
            laequis
          • bloated is not quite the correct term

            Active is a more proper term. Just like how on an Android device you have to shut down background task to save battery. Too many intel apps run in the background. By forcing the new framework they are retraining developers to think more async with processing on the server instead of the device. Its a smart move that will pay off later.
            B_Manx
          • Do people actually need

            full preemptive multitasking on these mobile devices if they could do it?
            RichDavis1
          • Nope. And that's the point!

            Tablets do not offer preemptive multitasking because they don't need to in order to meet the needs of the consumer who generally does one thing at a time. The only significant difference between Windows 7 and Windows 8 is that Windows 8 incorporates the Windows RT (for Run-Time) environment as a replacement for the Start Menu. This environment offers a high-performance "Metro" UI running under a Windows 8 desktop - like any other Windows application. Take that Windows RT component out of Windows 8 and port it to ARM and you end up with an ARM-based Windows RT environment.

            Windows 8 becomes ideal for the IT professional who needs the power of preemptive multitasking on the desktop and Windows RT becomes the ideal platform for the mobile consumer who has no need for the professional grade tools found on the desktop. They do all of their computing using apps from the Windows Store.

            If I had to guess, including the desktop metaphor in Windows RT is a stop-gap until Microsoft can fully port all of its mainstream applications into the Metro environment.
            M Wagner
          • Out perform in what situations?

            It's the chicken and the egg scenario. Desktop processors have never had to worry about the power consumption issue because they were always connected to power. And as such software was designed with that in mind. That's not the case now which means both processors and software need to be designed in a different way. The x86 processor design at it's foundation was never designed for low power consumption. ARM has and is why it has a leg up going forward.

            AMD sees that x86 is a dead end with the computing platform going mobile more and more in the future. Their announced support of ARM means that they are working on a chip that will allow you to run x86 software on ARM as a intermediate step until most software is completely ported over to ARM by which time ARM chips will be more powerful as well and the software running on it won't be as bloated as the old comparable x86 software.
            laequis
          • I don't think so ...

            I think that both AMD and Intel realize that their is a growing divergence between professional and consumer needs.

            The Intel/AMD x86/x64 architecture is quickly becoming pure x64, and will continue to grow for professional applications (academic research, large scale transaction processing, provisioning cloud services - virtualization, web services, etc.).

            On the consumer side, both vendors need to grow their mass markets. Manufacturing ARM devices will permit them both to stay in the consumer game - and to use their manufacturing expertise to improve the performance of the ARM architecture.
            M Wagner